Outsourcing News for August 2009 | MicroSourcing

Strategic Sourcing Contract Management

Fifty-five percent (55%) of businesses do not give enough attention on the strategic management of outsourcing contracts. Instead, they focus more on the operational aspect. This is based on a Gartner survey of companies from different industries worldwide.

According to Frank Ridder, Gartner research director, "many organizations struggle to develop an effective and efficient sourcing environment, which is necessary to achieve positive sourcing outcomes." He added that companies fail to manage outsourcing relationships effectively because service providers usually tell buyers that they can deliver more than what they are actually capable of.

To have an efficient and long-lasting outsourcing relationship, Ridder suggested that sourcing activities must be in line with business goals and a flexible sourcing environment must be established to be able to adapt to the market and organization.

The Business Process Association of the Philippines (BPAP) is scheduled to meet with members of India's National Association of Software and Services Companies (Nasscom) for a unified effort against plans of anti-outsourcing policies in the United States and in Europe.

The Philippines and India lobby against anti-outsourcing policies

The US and the European Union have gathered plans to enact protectionist legislations that would deter companies from outsourcing jobs offshore. Nasscom, India's main body representing the Indian software industry, has already been actively lobbying against this and has recently talked to BPAP to gain the Philippines' support.

"The Philippines and India are both BPO superpowers, so we need to have a common stand. We need to be ahead of the curb," said Jonathan de Luzuriaga, BPAP's executive director.

"Nasscom said we are No. 2 BPO destination in the world so we should help them out. It's just a matter of educating some geographies that outsourcing is now a reality and a global trend," he further added.

The meeting will involve plans to come up with a common position paper to be sent to the US and Europe. Nasscom and BPAP have agreed to explain the benefits of outsourcing directly to American and European companies should their efforts to stop protectionist legislation fail.

Outsourcing Cited as a Solution to the Economic Crisis

According to the the Capgemini Executive Outsourcing Survey, majority (74%) of North America's business leaders agree that outsourcing can assist a company in staying afloat amidst the current global economic crisis. Conducted by Harris Interactive and commissioned by Capgemini, a leader in providing consulting, technology and outsourcing services, the survey was done to determine how public perception of outsourcing in times of economic downturn affects business leaders in making decisions.

Conducted last April 29 - May 15, the telephone survey further reveals that 79% of the 151 senior executives from Fortune 1000 companies agree that outsourcing has a poor public perception. However, public opinion has little or no effect on the executives' decision-making process when it comes to outsourcing IT, finance and accounting, and HR and procurement tasks.

Top Human Resources Solutions Firm Opens in Eastwood

As a result of numerous requests by its top clients to open a facility in Eastwood, ExcelAsia, the industry's top human resources (HR) solutions firm, has just opened a new site in Eastwood; its largest in the Philippines. It joins among 4 other ExcelAsia facilities found in Cebu, Makati, Bacolod and Alabang.

Boasting an 80% success rate, ExcelAsia has helped train over 20,000 people within a wide range of BPO jobs. As well as HR and training, ExcelAsia conducts sourcing, recruitment, and business consultancy.

It also announced the launch of its new website, ExcelAsiaJOBs.com; a new database of employment opportunities for Filipinos looking for work in the Philippine BPO industry.

According to ExcelAsia President, Rita Trillo-Ugarte, the new site in Eastwood will help the firm form new partnerships with BPO service providers in the area:

“The Eastwood site will make it easier for applicants as well as our clients to leverage our various training programs. Aside from the strategic location, our new site will allow us to extend partnerships with BPO service providers with multiple sites,” she said.

Many companies have little understanding of outsourcing value

A survey among 250 Chief Information Officers (CIOs) and Chief Financial Officers (CFOs) of Europe's largest companies reveals that many businesses have little understanding on the value of outsourcing and its impact on their companies. This was commissioned by Cognizant, a leading global IT and BPO services provider, and developed by Warwick Business School.

Less than half (43%) of CIOs and CFOs who participated in the survey have attempted to measure the return on investment of outsourcing to their companies. Thirty-seven percent (37%) did not try to measure the value of outsourcing, while 20% do not know if they have tried to determine the ROI or not.

According to Sanjiv Gossain, Vice President and Managing Director, UK and Ireland, of Cognizant, "Outsourcing has clear, long- and short-term benefits for businesses, but the research shows that many companies could be missing out by failing to adequately measure outsourcing's impact."

Volume of US Offshore Outsourcing Operations Increased

Based on the fifth annual report of the Duke Offshoring Research Network, in collaboration with The Conference Board, the number of US companies with offshore operations increased from 22% in 2005 to more than 50% in 2008. The report also shows that more than half of these service buyers have plans to expand their operations overseas.

According to Ton Heijman, senior advisor at The Conference Board, companies that have successful offshoring practices are able to cut costs, meet target service levels, and have better relations with service providers. The said report further indicates that because of the tough competition for highly skilled domestic workers, small and medium-sized businesses (SMBs) are opting to transfer some of their business tasks overseas and are finding new talent in Brazil, Sri Lanka, Egypt, and Russia.

Outsourcing Trade Missions

The Commission on Information and Communications Technology (CICT), along with the Business Processing Association of the Philippines (BPAP), concluded a week of outsourcing trade missions in the US and Canada. The mission was conducted to further supplement the growth of the Philippine BPO sector amid the economic crisis. According to the BPAP, mergers, disruptions, corporate restructuring, cost containment needs, and business changes needs of overseas companies are the causes for the majority of outsourcing investments in the Philippines.

The Philippines was represented during the trip as a major sponsor at the “World BPO forum 2009” in New Jersey with Globe Telecom, Animation Council of the Philippines (ACPI), Philippine Long Distance Telephone Company (PLDT), and Sencor and Multi-Rational Corporation in attendance. The missions further included trips to New York – with over a hundred companies signifying interest – and Toronto, which attracted over 80 attendees.

Pointwest Technologies and the National ICT Confederation of the Philippines (NICP), SPI-Bpo, Peregrine, DPC DATA, DTSI , Cybercity Teleservices and Affinity Express were among other members included in the Canada-US mission.